Impact of Change of Ownership and Assignment of Medicare Provider

130.1 – Impact of Change of Ownership and Assignment of Medicare Provider Agreement on Overpayments and Underpayments (Rev. 13235; Issued: 05-22-25; Effective: 06-23-25; Implementation: 06-23-25) Assignment of Medicare Provider Agreement: When an existing provider agreement is assigned to a new owner, the new owner is subject to all of the applicable statutes and regulations, terms and conditions under which the existing agreement was issued. One of these statutes requires the adjustment of ongoing payments to the provider to account for prior overpayments and underpayments. Under a CHOW, there is no change in the provider agreement; only the owner has changed. Therefore, when a new owner accepts assignment of the Medicare provider agreement, the Contractor continues to adjust any payments it makes to the provider. A. The Contractor Collects All Overpayments from the New Owner In a CHOW, the new owner that receives automatic assignment of the Medicare provider agreement also accepts responsibility for any overpayments that Medicare made to the old provider, whether those overpayments are currently outstanding or are determined after the CHOW. This rule applies even if the overpayments relate to a cost report or other time periods before the CHOW. Therefore, after the contractor receives the tie-in notice from CMS or the State Survey Agency (SA) confirming that CMS or the SA has approved the CHOW, the Contractor contacts only the new/current owner to collect any overpayments. It pursues all collection remedies against the new/current owner via (1) recoupment; (2) offset against Medicaid payments; (3) correspondence to the new/current owner; or (4) referral to the United States Department of the Treasury (Treasury). B. The Contractors Recoup funds first on any outstanding Overpayments from any Underpayments before releasing the excess amounts back to the new provider. After a CHOW, the Contractor issues any provider underpayments to the new owner, even if the underpayment relates to cost years or other periods before the CHOW. Such underpayments include, but are not limited to, underpayments which result from reimbursement appeals (regardless of whether they result from administrative or court decisions, from administrative resolutions or from court settlements). Contractors verify if there are any underpayments. If so, the Contractors shall recoup funds and apply to outstanding overpayments from any underpayments that are determined for the provider and refund any excess amounts. C. Sales/Transfer Agreements between Owners are not Binding in Medicare Program If the new owner does not reject automatic assignment of the previous owner’s Medicare provider agreement, the assignment will occur automatically, consistent with Medicare regulations. Therefore, the Contractor shall recover overpayments from the new/current owner, regardless of the terms of any sales or other transfer agreement. D. Overpayments Related to Fraud A new owner that accepts assignment of the prior owner’s Medicare provider agreement is responsible for any overpayments, regardless of the basis for the determination of the overpayment unless the overpayment is under fraud investigation. In the case where the previous owner was under a fraud investigation the assignment of the overpayment would not pass to the new owner.